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The Ghosts of Detroit (part 2)

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It was Durant who invented the modern car company, different models in different price ranges with different features all made with basically the same parts. The problem was Durant was a victim of his own success, he kept on buying more and more suppliers and car companies that added little to the GM line up. He bought thirteen different car companies and ten parts companies and then the sales began to slump. GM would need $12 million to keep from shutting its doors, and the bankers agreed to the loans one condition, that Billy Durant give up his control of GM.

On November 15, 1910 Durant announced his retirement and for most people that would be the end of the story, but Billy Durant was not most people. The bankers had no better luck managing GM than Durant had. They fought a nightmare of duplicate companies producing duplicate components and like most bankers they moved to cut the large items rather than the million small items. They reasoned that GM made more money selling big cars than they did selling small cars, so they slashed smaller models in favor of bigger ones. The Buick 10 was cancelled; it was a small four-passenger runabout designed to compete with Ford's Model T.

In 1911, Buick sales were down 50%. Their factories were closing, their workers were laid off by the thousands, when along came Billy Durant. You remember Billy, don't you? Durant announced to the world that he was founding a new car company and its models would be designed by one of the foremost auto racers in the world, Louis Chevrolet. Durant bought one of the shuttered Buick factories and staffed it with former Buick workers and began building the Chevrolet 490. The 490 was actually the Buick model 10 which had been cancelled by the bankers.

The 490 earned its name from the fact that it cost $490, fifty dollars more than a Ford Model T, but offering an electric starter and electric running lights and a spare tire. By 1915 Chevrolet was selling more than 13,000 cars a year, but Durant was still unhappy. He had begun to acquire large blocks of GM stock, and he encouraged his friends to buy GM stock as well. In September of 1915 Durant showed up unannounced at the annual shareholder's meeting with GM's Board of Directors.

Like a scene out of a Hollywood movie, Durant was followed into the room by several assistants carrying bushel baskets full of GM stock certificates. Approaching the board he announced, "Gentleman, I now control this company." He managed to stay until 1920 when he was again forced out because of his penchant for buying up companies. Through pluck and guile, with hard work and genius, Billy Durant had built General Motors. But by 1920 he had again driven GM deep into debt as sales fell, and so again, Durant resigned.

In 1921 Durant filed papers of incorporation for the Durant Motor Company and again he would compete by building small cars against the Ford Model T. The Durant Star went head-to-head with the Model T, while the Durant Six and the Flint Model went head-to-head with Chevrolet and Buick. But the company folded in the depths of the depression in 1933. Durant had been one of the multimillionaires who had thrown their own fortunes into the stock market, trying to stop the crash. Durant listed his personal assets at $250. He ended up owning a restaurant and a grocery store, which he operated out of a former Oldsmobile showroom. Durant being Durant, he later added bowling alleys to his conglomerate holdings.

Meanwhile the shaky partnership between the Dodge Brothers and Henry Ford had become insufferable to Ford. No longer having any cash problems, Ford resented the brother's share of his company. Ford built his own parts and manufacturing factories to eliminate his need of the Dodges. That was fine with the brothers, for they, too, were rolling in cash, Ford's cash. Since they no longer made parts for Ford, and having the tooling, the factories and the workers, the Dodge brothers conceived of their own car, created from the suggestions which Ford had rejected.

The new Dodge featured a speedometer, electric lights and a gas gauge. The Ford required you to put a stick in the gas tank to see how much fuel was left in it. Ford did not think it at all funny that his stock dividends were being used to bankroll his competition. When the Dodges offered to sell out to Ford, in a fit of stubbornness he refused. Instead Ford announced in 1916 that the company would no longer pay dividends; the company would plow all its profits back into the company.

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It was an absurd concept; the Ford Motor Company couldn't spend all the money they already had on hand. Like Durant, Ford, by controlling his suppliers and mass producing the same model year after year, saw manufacturing costs fall to ridiculous levels. Even at Ford's five-dollar-a-day wage, if twenty extra men could turn out ten extra cars, it was more than cost effective.

The Dodges sued and the court ordered Ford to pay $19 million in back dividends, but since Henry Ford was the majority stockholder, most of the money went straight back to him. He then announced that he was retiring and turned the company over to his son, Edsel. The next year a Los Angeles newspaper broke the story that Ford was planning to open a new car company hiring 50,000 workers and selling cars for between $250 and $350.

The Dodges had had enough. If Ford actually went through with the scheme it would bankrupt the Ford Motor Company as well as Dodge. The Dodges sold their stock for $25 million and all the rumors of Ford's new car company quickly evaporated. In 1920 Horace Dodge fell ill with pneumonia; John Dodge fell ill ten days later, and both men passed away from the world that they were integral in creating. Their widows sold out to the bankers and the bankers sold out to Walter Chrysler in 1929.

Walter Chrysler, like the Dodge Brothers, had worked around steam engines. An executive at GM asked Chrysler if he'd ever given any thought to manufacturing automobiles. Charles Nash, then the president of Buick, made Chrysler his production chief. After the ouster by the banks of Billy Durant, it was Chrysler who was seen as having the closest ties to the bankers. Chrysler revolutionized the way cars were manufactured, by cutting costs and streamlining production, and then succeeded Nash as president of Buick. So when Durant reclaimed ownership of GM, Walter Chrysler began cleaning out his desk and submitted his resignation to Durant.

Where a vindictive man might see this as a chance to settle scores, Durant instead pleaded with Chrysler to stay on. He offered him the unheard of salary $10,000 a month for three years, plus a half million dollar bonus per year, plus $500,000 worth of GM stock. Durant gave Chrysler full control of Buick and Chrysler answered to no one except Durant. After three years Chrysler was one of the richest men in the automotive industry.

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Chrysler's purchase of Dodge in 1929 was seen as tough luck by many, but Chrysler managed to move the company forward and pay down the company's debt, and he built the Chrysler Building in New York while he was at it. As a young man Walter Chrysler was considered an expert at tuning locomotive engines. He never lost his love of engines; where he gladly turned over day-to-day control of the company in 1936, he still followed the engine development program almost daily.

Henry Leland had left Cadillac after the GM purchase. He was encouraged by friends and investors to found a new car company. Using his prestige, Leland sought to design a new American luxury car, a car that would rival the Rolls Royce; a car he named after his favorite President, Abraham Lincoln. Sadly, for all his innovation on the factory floor and mechanical know-how, the new cars were seen as behind the times in their styling. The company only lasted five years under Leland's leadership. Henry Ford then purchased Lincoln, some said just to spite Leland. He then gave the company to his son Edsel, like a toy from a cereal box.

They created an industry in Detroit second to none and it reached out and touched all aspects of America. Detroit needed steel from Pittsburgh and Chicago and coal from Kentucky and West Virginia and rubber from South America to make tires in Ohio. Moving all of these goods meant more trains for the railroads. The lure of better-paying industrial jobs lured farm boys from across the country to the busy streets of Detroit. The loss of farm labor was made up for by using more machinery, the tractor, the pump and the generator, which in turn also created more industrial jobs, which attracted even more farm labor.

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I who am I? Born at the pinnacle of American prosperity to parents raised during the last great depression. I was the youngest child of the youngest children born almost between the generations and that in fact clouds and obscures who it is that I (more...)
 

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